Advice about clearing 10k debt

JMF1976

My girlfriend has a total of 10k debt from a few credit cards and a loan. She has a decent job but currently paying £350 a month is not clearing any debt.

What would be the best way to actually start reducing this debt? I could get a loan for 10k easily and clear it - that is one option. If she applies for a 0% balance transfer, her credit limit is only about £1000

Anyone? Thanks...

Tixy

Hi and welcome

This may be better on the debt free wannabe section of the forum.

However - what are the balances and APRs for each debt she has?

Are the cards all currently maxed out.

Most people on here will advise you not to take out a loan in your name, as obviously you then become legally liable for the loan repayments. If she can't pay them (if she loses her job) or decides to stop paying it (if you break up) then either you end up paying yourself, or your credit file is badly affected.

If she has a decent job is she not able to find a way to increase her repayments at all? has she looked at all her outgoings to see whether she can reduce any/get things cheaper etc so you can put more towards her debt repayments?

If she applies for a 0% balance transfer, her credit limit is only about £1000

Has she tried applying and only been offered £1k? if not why does she think that is all she is likely to be accepted for?

JMF1976

I'm not sure about the APR rate off hand. All the cards are maxed out yes.

I am apprehensive to do that but obviously she is stuck in a rut and something needs to give. As I have never had any debt like this I have little knowledge in this area, hence the question.

If she increased her payments, she'd still be paying a lot to the CC companies overall which isn't the most appealing option.

She has applied for two CC's with 0% on balance transfers. Both set the limit to around £1000.

Thanks

Cycrow

even if shes only accepted for 1k, that could help abit by moving some of the debt onto 0%

it would depend apr of the existing cards and balance transfer fee.
the £350 that she has for the debts, is this just the minimums?

You-kip

TBH 10k is not a lot of debt especially if she's got a decent wage.

If she's got a decent credit file hit her debt with 0% credit cards which at 400 sheets a month it would clear in 2 years.

JMF1976

Yes I think it is the sum of minimum payments for all cards.

Just a thought - what is to stop her getting a few 0% credit cards and moving £1000 over to each?

Also - if I went down the root of clearing her debt via a loan, would her credit rating increase therefore enabling her to take our her own loan and enable her to pay me back?

Tixy

Did she use those 2 new cards to transfer some of her most expensive debts on to 0%?

There are hundreds of cases on these boards of people who have put a partner's debt in to their own name and then ended up having to repay the debt themselves. I'd only consider obtaining a loan in your name if you are prepared for that and effectively prepared to potentially gift her the £10k.

If I were you I'd offer support and advice on improving her own situation rather than risking your own finances.

What has she spent the money on? anything she can now sell to pay a chunk off the debt?
Perhaps suggests she fills in a snowball calculator with details of all her debts to see how long it will take her to repay the debts at the current rate of £350, and how much that would decrease by if she could increase her repayments to say £450 or £500 a month.

E.g. if her APRs were all 20% the it would take 39 months at £350 a month, but only take 28months if she could up it to £450 a month (and would save over £1000 in interest)

Snowball calculator here - http://www.whatsthecost.com/snowball.aspx

Maybe suggest she signs up and posts in the debt free wannabe section for other ideas to get debt free quicker.

Tixy

JMF1976 wrote: »

Just a thought - what is to stop her getting a few 0% credit cards and moving £1000 over to each?

She may get a few cards like that but unlikely to get 10 before they start to reject her (unlikely to get more than 3 very close together).

JMF1976 wrote: »

Also - if I went down the root of clearing her debt via a loan, would her credit rating increase therefore enabling her to take our her own loan and enable her to pay me back?

She may be able to take out a loan herself in a few months, but equally may not. Certainly I wouldn't bank on it.

JMF1976

Tix - she didn't take the new cards on - she just looked into it.

That was my question to her.. what have you got to show for the 10k, answer: nothing. It was from a previous relationship which was down to her partner.

I could get a written agreement for a personal loan to her if I wanted to cover myself in the event of a breakdown in our relationship, by the way.

Tixy

If you do get a loan for her then a written loan agreement would be better than no loan agreement. However you still need to be prepared and able to repay the loan repayments yourself.

As even if you take court action against her and are able to obtain a CCJ against her actually getting the debt repaid can be hard and can be slow.

Has she tried and been declined for a loan in her own name?

ilovelondontown

PLEASE PLEASE! Do NOT get a loan out on your gf behalf. Its not a helpful thing to do for either party. I wouldn't even do that for my husband!

What you need to realise is that she's got this debt from over spending, if you help clear it for her, I g'tee that without pin pointing the problem and stopping the cycle of spending more than you earn, you'll end up with your debt and her new debt to boot and you'll be in deep do-do!

The most helpful and noble thing you can do is help her work out where the overspend is coming from and to work out ways to curb it. I had £11k to my name this time last year and by the end of the year I'll have just £2.5k left.

It's do able and there are a lot of ways to get out of the borrowing to live cycle.

10 mins on the DFW boards will tell you all you need to know!

Best of luck!